AEMC suggests new electricity network cost determination rules

The Australian Energy Market Commission (AEMC) has proposed new rules which would place tougher regulations on how electricity network operators are allowed to determine network costs.

The AEMC has proposed instigating a system in which they are able to benchmark operators against each other to determine whether network price increases are justified.

These results would then be reported annually and used to determine spending allowances for those operators in the future.

Network or 'poles and wires' costs have been one of the driving forces behind increases to electricity prices across Australia in recent years, but that could be a thing of the past if these new rules are made into law.

"This draft determination aims to improve the capacity of the AER by giving it new tools to determine efficient costs for each regulated business - and enabling it to decide what costs are efficient," said AEMC chairman John Pierce in a statement yesterday (August 23).

Mr Pierce also highlighted other areas of the electricity and gas market in which the AEMC was looking at potential efficiency improvements.

Another upcoming report from the AEMC is titled the Power of Choice review, and will look at how more control can be given to Australian consumers when it comes to making a decision about how they access gas and electricity.